Residential housing starts fell a staggering 11.2 percent in December, despite encouraging growth in previous months, according to a new sales report released Wednesday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
Single-family starts, meanwhile, fell by 6.7 percent from the month before. In total, only 1,078,000 private housing starts were built in December.
While 3.6 percent more housing units were started in 2018 than the year before, the low numbers still indicate a dearth in new construction across the country – the drop is, at least partially, caused by rising mortgage rates and lack of available inventory on the market.
“Housing starts, like many other housing indicators, finished 2018 on a low note,” Danielle Hale, chief economist at Realtor.com, told Inman. “A spike in mortgage rates in early November undermined buyer purchasing power and caused a dip in builder confidence that has started to recover, but has yet to hit to its October level.”
Permits for new construction stayed more or less the same as in November — they rose a meek 0.3 percent to a seasonally adjusted annual rate of 1,326,000. Housing completion rates, meanwhile, also took a hit — dropping 11.2 percent from November to a rate of 1,097,000.
While end-of-the-year results should not gauge results for the entire year, the falling numbers are worrisome given that current construction levels are nowhere near what is needed to keep up with demand.
“Looking forward we may see a few more months of weak single-family starts before increasing confidence leads to increased production,” Hale said.